Sunday, March 27, 2011

Dodd-Frank Blowback: Wells Fargo Stops Enrollment in Debit Rewards

It's all because the Dodd-Frank Act mandated a cap on fees that banks can collect from merchants whenever customers swipe their cards.

The current proposal would cap fees at 12 cents per transaction, versus the current 1 percent to 2 percent of the transaction amount.

The banking industry says the change could slash its debit swipe fee revenue by as much as 90 percent.

A final rule is expected from the Federal Reserve by April 21, unless Congress delays the deadline.

The rule will take effect three months later.

Wells Fargo is likely making its move now to bring attention to the rule and how it will impact debit card users. Such a dramatic cut in revenue will most assuredly impact the way banks provide debit card services---and it won't be good for debit card users.

The entire nutty scheme whereby government controls fees banks charge merchants is the result of merchant association lobbyists getting to congressmen who then put the legislation in the even nuttier Dood-Frank bill.

More and more of these gems will continue to pop up as it becomes more obvious as to what is in the Dodd-Frank Act, and how it serves nothing but special interests.

2 comments:

Don't mind it at all, I love dealing with cash anyway! If they would rather make 0 on transactions it's up to them. They don't understand how to function with slim margins as they are so profit driven & wasteful! Well they will be totally out of revenue if they shoot themselves in the only other foot they have left. So take it or leave it big banks, awww too bad, ur not used to being on the other end of that statement are you?! Bring it on, we can use cash again & our good old fee & free ATM cards!